The Debt-Peonage Society

The New York Times ^ | March 8, 2005 | PAUL KRUGMAN

[Torie]

I usually disagree with Krugman, and sometimes find him disingenuous and tendentious, but I agree with each and every word he wrote in this Op Ed piece.

Credit Card companies know the risks when they extend credit, and induce the spendtrift who don't read the fine print to get sucked into the quicksand. BK and a fresh start is not only something I think if fundamentally moral and right, but it also is the only real curb there is on credit card companies just going hog wild, and leading some folks into lifelong peonage as Krugman would put it.

I am a Republican, and if I were in the Senate, I would have been the sole Pubbie to vote no on cloture with respect to this turkey.

[cicero's_son]

Ditto.

I even wrote Krugman to tell him so.

I hope the Republicans are pleased with themselves--they are going to pay a huge political price for this down the line.

[iopscusa]

I don't think I agree with Krugman on anything much less his take on revolving credit worthiness....you play you pay.

[ikka]

Do you think this will have an effect on housing prices? Maybe people will cut back on the amount they are willing to borrow?

[RKV]

Individuals are responsible for their own actions. NO ONE is forced to use a credit card. I know, because my own brother got into this kind of trouble, and I bailed him out. This is just more of the same from Krugman.

[Bahbah]

Same here as far as this bankruptcy bill goes. He could have done a much better job, however, of addressing the particular problems with this bill. Instead, he had to go to the broad brush approach of Republicans evil, Democrats good. Republicans are going to get hammered repeatedly over this.

[RKV]

When you find yourself on the same side as four partisan DemocRATs like
Ted Kennedy, Russ Feingold, Dick Durbin and Charles Schumer you are not
thinking like a Republican.

[stan_sipple]

Warren Buffet is again over the top and a little hypocritical, after all he has made billions shorting the dollar while he gloom and dooms the american economy down.

Still severe bankruptcy reform is a very bad idea for Republicans to be promoting; I thought Enron etc taught them something about how all strata of society try to avoid paying their bills when they can.

Also its easy to be in favor of bankruptcy reform if you are a Senator from states like Texas, Florida, and some others now where it is impossible to collect debts anyway.

[The Spirit Of Allegiance]

Not discussed is the fact that TORT issues are largely what made medical care so costly. Sorry you agree with "everything" here.

[facedown]

...over the past three decades the lives of ordinary Americans have become steadily less secure, and their chances of plunging from the middle class into acute poverty ever larger.

Second rate drivel from a third rate hack.

[secretagent]

Credit Card companies know the risks when they extend credit..."

As do adults when they sign the contracts .

...and induce the spendthrift who don't read the fine print to get sucked into the quicksand.

They don't cause the spendthrift to get into debt - the spendthrift alone decides that.

[durasell]

This bill is a hugely bad idea -- in my opinion -- because it's going to play havoc with the banking system. Again, just my thoughts -- but I see two waves hitting the banks. The first is the massive number of people who'll rush to file Chap 11 under the old rules. Some of these people would have been on the fence and continued to pay off the bills, but since this is the last chance to walk away, many of them will take the opportunity.

Secondly, once people start failing in a significant way -- and it's gonna happen. They're gonna start losing their homes. Banks are not only going to end up with a lot of homes to sell (something they don't like to do) but if the numbers reach a certain level (as yet to be determined) it's going to drive prices down, so the banks end up upside down on all those mortgages.

This bill seems to be a real exercise in being real careful what you wish for...

[Torie]

One oddity of the bill is that if you are below the median income of a state you can still do chapter 7 (discharge all debts except non dischargeable debts arising from fraud, puntive damages ala OJ, certain taxes owed etc), and if you are above, you can't. That should engender lots of litigation right there. And woe the person who was above the median income at the time of the BK (or whatever the test is), but typically is below it.

The whole bill is a Rube Goldberg thingie and an embarrassment. The only merit it has is limiting the abuse of the effectively unlimited homestread exemption that Texas and Florida offer up, which is indefensible.

[Servant of the 9]

Credit Card companies know the risks when they extend credit, and induce the spendtrift who don't read the fine print to get sucked into the quicksand.

If you rent the money, you gotta return it.

They don't read the fine print?
Stupidity has always been a capital crime.

I know it's hard. When I was younger I dug myself in so deeply it took years to dig out, but I owed the money.

So9

[Torie]

No. Mortages are secured debt and typically non recourse to the individual in any event. The lender can look solely to the property for repayment. There are exceptions, but they are of little practical significance for homeowners.

[Shermy]

"Credit Card companies know the risks when they extend credit..."

As do adults when they sign the contracts ."

The "adults" don't have millions to spread around politicians to change the law to increase profits multi-millions.

[durasell]

No, all the "adults" have is the ability to vote and fire the pols.

[Dave S]

I think you are wrong. Under chapter 11, you lose your home now so if they rush to file under chapter 11 they wont keep their house anyway. Chapter 13 or the type of bankruptcy that the Republicans are attempting to make most file under you can keep your house, but you continue to make some payments on your other credit.

[Shermy]

One oddity of the bill is that if you are below the median income of a state you can still do chapter 7 (discharge all debts except non dischargeable debts arising from fraud, puntive damages ala OJ, certain taxes owed etc), and if you are above, you can't.

Really? That's so patently awful. The consequences are enormous, including credit card companies lobbying to have the govt. concocted statistical "median" to be lowered.

"The whole bill is a Rube Goldberg thingie and an embarrassment."

Yep. But the credit card companies paid big bucks to get this through.